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Governor says he'll reject budget without 2 percent pay raise

By Tim Lockette, The Anniston Star, Ala.
McClatchy-Tribune Information Services

March 05--MONTGOMERY -- Gov. Robert Bentley won't sign an education budget from the Legislature unless it includes a 2 percent pay raise for teachers, the governor announced Wednesday.

"He'll send it back with an executive amendment," said Jennifer Ardis, Bentley's spokeswoman. In lieu of signing a bill, an Alabama governor can make amendments and send them back to the Legislature for consideration.

The Alabama Senate last week voted to approve a $5.9 billion proposed budget for the state's K-12 schools and higher education -- including a $34 million outlay for a one-time, 1 percent pay bonus for the state's teachers. The budget has yet to come to a vote in the House.

That bonus fell short of the 2 percent Bentley requested in his State of the State address earlier this year, citing "the sacrifices our teachers have made."

Members of the Senate budget committee expressed sympathy for the request -- but also cited the need to pay back the remainder of a massive loan the state took out from its Education Rainy Day Fund at the height of the recession. The one-time bonus would cost the state only $34 million in 2015, Sen. Trip Pittman said at the time, compared to a $74 million annual outlay for a permanent 2 percent raise.

Democrats and the Alabama Education Association have panned the 1 percent bonus, saying educators' take-home pay would actually be lower if the Senate budget passed. They say the one-time bonus, about $480 for the average teacher, would be gobbled up by expected increases in the teachers' premiums for the Public Education Employees Health Insurance Program, or PEEHIP.

PEEHIP is expected to come up $220 million short in 2015, Retirement Systems of Alabama general counsel Leura Canary told a House budget committee Wednesday. She said the cost increase is due mostly to a shift in the program's demographics, with more retirees and dependents using PEEHIP while fewer education employees are paying in.

About $75 million of the increase, Canary said, is due to the Patient Protection and Affordable Care Act, also known as Obamacare. Canary said the health care law has imposed additional fees and expanded coverage demands on the program.

"PEEHIP covered birth control only if it was medically necessary," Canary said, citing one example of a coverage change. "Now it's covered with no copay."

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The Senate's proposed budget doesn't increase funding for PEEHIP. Democrats say that without an increase, teachers will have to pick up the difference in their premiums, at about $972 per year per teacher.

"If I get a bonus of $480 a year, and they ask me to pay $972, I'm in the hole," said Rep. Craig Ford, D-Gadsden.

House Ways and Means chairman Rep. Bill Poole, R-Tuscaloosa, challenged those numbers in budget hearings Wednesday. PEEHIP has not approved an increase, he said, and anyone who assumes they know the amount of an increase is "factually incorrect," he said.

Canary said it was indeed too early to put a dollar amount on a potential PEEHIP premium hike.

"If there's no more funding from the Legislature, it's highly likely that there will be a premium increase," Canary said. She said PEEHIP has other means to make up the shortfall, including increases in copays, that could keep PEEHIP from funding the entire shortfall with premium increases.

In his statement Wednesday, Bentley also said he'd return any budget to the Legislature if they don't "fully fund" PEEHIP. Ardis said the governor was seeking restoration of $72 million in additional funding for PEEHIP that was in his budget proposal.

The pay raise wasn't the only contentious issue in the education budget. Alabama State University president Gwendolyn Boyd spoke against a cut of $10.8 million to Alabama State University -- nearly one fourth of the school's state funding.

"If you cut an institution by $10.8 million, you're cutting the legs out from under the institution," Boyd said.

Alabama State is now under investigation for alleged fraud and misuse of public funds. The school typically gets around $40 million from the state, but the Senate's proposed budget would move $10.8 million to "conditional appropriations" that could be paid out only if the state has more money than originally projected in 2015.

The governor has the power to release those appropriations, and some in the Senate argued that the $10.8 million would require accountability from the school. Bentley, however, has said he doesn't support the proposal.

House committee members also expressed misgivings about a clause in the Senate budget that would prohibit spending to implement new academic standards. Some said the move was a back-door effort to block the Common-Core-based College and Career Ready Standards, which were adopted by the state Board of Education over the objections of conservatives opposed to Common Core.

"I'm very concerned about using our budget for legislation," said Rep. Phil Williams, R-Huntsville.

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The House Ways and Means Committee must approve a budget bill before it goes to the full House for a vote. Poole, the committee chair, said a House version of the budget would go to committee members Friday and return for a vote next week.

One core problem in that budget, he said, would be the growth of PEEHIP expenses and the seeming lack of money to pay them.

"The problem is that tax revenue is outstripped by the growth in the cost of healthcare," Poole said.

Capitol & statewide correspondent Tim Lockette: 256-294-4193. On Twitter @TLockette_Star.

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(c)2014 The Anniston Star (Anniston, Ala.)

Visit The Anniston Star (Anniston, Ala.) at www.annistonstar.com

Distributed by MCT Information Services

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